Plastics Products, NEC

SIC 3089

Companies in this industry

Industry report:

Companies in this industry manufacture a multitude of items, ranging from clothespins and air mattresses to shoe soles and septic tanks. For more information about manufacturing processes and the history of plastics products, see other entries in industry group 3080. For information regarding resin manufacturing, see SIC 2821: Plastics Materials, Synthetic Resins, and Nonvulcanizable Elastomers.

Industry Snapshot

The value of shipments for miscellaneous plastics products was $74.11 billion in 2008, reflecting a decrease from $75.59 billion in 2007. Although the markets for miscellaneous plastics products are extremely fragmented, a few major categories stand out. For instance, consumer, institutional, and commercial fabricated plastics products accounted for nearly 21 percent of industry shipments in 2008, or $15.56 billion. Transportation fabricated plastics products, except foam and reinforced plastics, accounted for 19 percent of overall shipments that year. Plastics packaging (excluding film and sheet, foam, and bottles), claimed 17 percent; building and construction fabricated plastics products, except foam, plumbing fixtures, hardware, or reinforced plastics made up 14 percent of shipments in 2008; electronic and electrical fabricated plastics made up five percent; and plastic dinner, table, kitchen, oven, and microwave ware made up three percent. Other major product groups included industrial machinery, shoe products, and plastic furniture parts.

Organization and Structure

There are at least twelve major processing techniques used to form plastics goods. A traditional and popular technique is extrusion, which entails melting and compressing plastic granules in a tube. A screw conveyor inside the tube forces the plastic through a nozzle at the end of the tube. The physical characteristics of the plastic can be altered by applying heat or cold to the barrel, adjusting the screw pressure, or using different types and sizes of screws. Extrusion processes are used to make pipe, sheeting, films, and various forms.

Another popular processing technique is blow-molding, whereby extruded plastic is forced into a bottle-shaped mold. Compressed air inflates the hot plastic and pushes it against the cold sides of the mold, resulting in thin-walled plastic containers. Injection molding, one of the most popular processing operations, entails extruding plastic directly into a mold, where it hardens into a solid form. Sheets of plastic are created through calendering or film and sheet extrusion. Foam is made in a process called foaming. Other popular plastic processing techniques include film casting, rotational molding, laminating, and casting.

The two main classes of plastics are thermosets and thermoplastics. Thermosets, which account for only 10 percent of the material used in this industry, harden by chemical reaction and cannot be melted and reshaped once they are created. Primary products created with thermoset plastics are epoxies and phenol formaldehyde (Bakelite). Epoxies are used to manufacture flooring, protective coatings, adhesives and cements, electrical hardware, and particleboard. Bakelite is formed into electrical parts, pot handles, and various knobs.

Thermoplastics include acrylics, cellulose proportionate (Forticel), ABS (acrylonitrile-butadiene-styrene), polyphenylene oxide (Noryl), and polysulfone. Acrylics are utilized in the production of windows, signs, vehicle light covers, and textiles. Forticel is applied in the manufacture of items such as pens, typewriter keys, telephone housing, and other applications that require impact strength. ABS, which has very high impact resistance, is used to make drainpipes, automobile parts, and small appliances and tools. Noryl, which combines high impact strength with temperature stability, is used for products like machine parts and equipment housing. Finally, polysulfone, which is heat resistant, is used in battery casings, smoke alarms, electronic connectors, and shower heads.

Background and Development

Keratin, a natural plastic, was used in the United States to make lantern windows and other simple items as early as 1740. Gutta percha, or gum elastic, was first used during the mid-1850s to make billiard balls and ocean cable insulation. Manufacturers borrowed forming and processing techniques from Malayan natives. Shellac plastics, developed by Samuel Speck, also emerged during the mid-1800s and were used to create goods such as checkers, buttons, and insulators.

Following the invention of the first synthetic plastics in the late 1870s (see SIC 2821: Plastics Materials, Synthetic Resins, and Nonvulcanizable Elastomers), plastics products sales began to accelerate. Dr. Baekland, an American, introduced the first moldable plastic, Bakelite, in 1909. Bakelite prompted a flurry of new molding techniques and resins during the early 1900s. Advances during World War II also bolstered the industry. The rampant proliferation of new synthetic chemicals and production processes during the 1950s, 1960s, and 1970s resulted in massive industry expansion. By the late 1970s, plastics products had become a staple of American life and were rapidly displacing conventional materials in a range of applications.
U.S. sales of miscellaneous plastics products expanded rapidly during the 1980s, but increased competition, both at home and abroad, contributed to lagging price growth. Total U.S. plastics products shipments were $105 billion by 1995. About 53 percent--or $55.3 billion--of that total was comprised of miscellaneous goods from this industry. Despite a late-1980s and early-1990s U.S. recession, shipment growth persisted as new additives and processing techniques were introduced.

Stiff competition and weak prices continued to plague manufacturers in the early 1990s, but increased sales of plastic goods for automobiles, packaged goods, and construction materials boosted margins for many competitors. Output of all plastics products grew throughout the 1990s, and prices in some important market segments rose an estimated three percent to five percent per year. Sales in some depressed sectors, such as high-tech engineering plastics, were rebounding, prompting industry receipts to climb through the mid-1990s.

In the long term, the use of plastics products was expected to proliferate. However, successful manufacturers will be forced to develop and implement improved processing techniques that reduce costs and improve quality. As foreign competition mounts--particularly for commodity-like products--U.S. technological superiority in plastics will become paramount.

Despite industry consolidation during the late 1980s and early 1990s, the miscellaneous plastics products industry remained relatively fragmented. About 8,330 companies competed going into the mid-1990s, up from only 8,045 in 1990. The number of companies was projected to drop slightly to about 8,200 by 1998. The average industry participant shipped about $6.6 million worth of goods, slightly less than 70 percent as much as the average U.S. manufacturer, and the majority of producers were small and specialized.

Sustained growth in plastic packaging sales fueled this industry in the late 1990s, as demand for durable, cost-effective packaging increased. Annual consumption of resins used to manufacture rigid and flexible packaging increased to more than 20 billion pounds. As the U.S. economy strengthened in the late 1990s, the value of plastics products shipments continued to grow. Shipments increased each year between 1997 and 2000, rising from $61.9 billion to $72.2 billion. However, when economic conditions began to deteriorate in the early 2000s, demand for plastics of all kinds began to wane as the manufacturing sector as a whole underwent a dramatic slowdown. As a result, the value of shipments in 2001 declined to $70.1 billion. By 2005, however, the value had increased to $78.15 billion, and in 2006, product shipments were valued at $81.25 billion.

Current Conditions

Value of shipments declined to $78.59 billion in 2007 and again to $74.11 billion in 2008. That year, the U.S. economy slid into a recession on the heels of a banking crisis. As a result, in 2009, the housing industry plummeted, two of the three Big Three U.S. auto makers filed for bankruptcy, and manufacturing in general slowed significantly due to substantially weakened consumer demand. While some economic indicators signaled a recovery in 2010, the process proved to be slow, with starts and stops in the return to economic growth.

Many manufacturers were doubly hit as consumers limited their spending and merchants pulled excess inventory from shelves that they did not then restock. As the pace of the economy began to inch back up, manufacturers anticipated not only supplying consumers' needs but also restocking merchants' depleted inventories. For example, in 2009, plastic sales of industry giant BASF fell by 20 percent. However, by mid-2010, the company anticipated that sufficient economic recovery had occurred to project a yearlong growth rate of five to six percent in its plastics division.

According to Dun and Bradstreet, this industry had roughly 10,500 firms and employed 382,600 in 2009. More than 91 percent of firms employed fewer than 100 people. However, the nine percent of firms with 100 or more employees accounted for approximately 60 percent of the industry's revenues. States with the greatest number businesses in this industry are California, Michigan, Ohio, Texas, Illinois.

Industry Leaders

Illinois Tool Works, located in Glenview, Illinois, manufactured a variety of products for automotive, electronic, food, construction, and other applications. ITW, which had 840 locations in 57 countries, generated revenues of $13.88 billion in 2009 and employed 57,000. Chevron Phillips Chemical Company LC, headquartered in The Woodlands, Texas, was one of the global leaders in the production of olefins and polyolefins. The company posted 2009 revenues of $12.65 billion in 2009 and employed 48,000. Crown Holdings, of Philadelphia, manufactured metal and plastic containers and lids for such well-known clients as Coca-Cola, Cadberry Schweppes, Heinz, Nestle, SC Johnson, Unilever, and Procter & Gamble. The company had 2009 revenues of $7.9 billion.

Workforce

The total plastics industry's workforce in 2009 was 533,670, according to the U.S. Bureau of Labor Statistics. Although the economic crisis of the late 2000s suppressed growth across almost all job sectors in the United States, in the longer term, the industry was expected to benefit from strong growth in demand for plastics products. However, productivity gains achieved through automation and the integration of more efficient processing techniques was expected to contribute to a lag between shipment growth and new jobs.

America and the World

Growth from within China during the mid- to late 2000s greatly expanded China's domestic demand for plastics, causing some concern that the country would run short on rare materials. According to Paul Bajacek in a 2010 ICIS Chemical Business report, "China's swiftly growing demand for plastics will leave it with a huge polymers deficit, despite capacity additions."

According to SPI, the plastic industry's trade association, the U.S. plastics industry had a trade surplus of $13 billion in 2008. The United States imported $38.6 billion worth of plastic goods, but exports were valued at $51.6 billion. However, the United States had a trade deficit with China in 2008 of $7.7 billion. The top five export markets in 2008 were Canada (22 percent), Mexico (21 percent), China (eight percent), Belgium (four percent), and Japan (four percent). The top five import sources in 2008 were Canada (30 percent), China (24 percent), Germany (seven percent), Mexico (seven percent), and Japan (six percent).

Research and Technology

Major technological trends in the plastics products industry included the ability to recycle and faster concept-to-production cycles. Indeed, many companies were ardently seeking flexible processing, extrusion, and molding techniques that would allow them to design and quickly manufacture new products. One of the most important recycling tactics was "design-for-recycling," whereby plastics products and devices were created in such a way that they can be efficiently ground, melted, and reused. For example, glue and adhesives that can contaminate reground materials were being eliminated from manufactured plastic goods.

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